By Tong Kooi Ong, The Edge
Since the latter part of last year, we have written extensively on the anticipated slowdown of the property market in Malaysia.
We paid particular attention to Iskandar, Johor. From literary plantation estates and nothing more, it became the “Promised land” to many developers, investors and property owners.
Over the last few months, there has been a series of mega land deals, some involving land reclamation. This has shocked the market and changed sentiment.
The latest launch last weekend is by Singapore-based Pacific Star Development Pte Ltd in Puteri Harbour, Iskandar. The Puteri Cove project comprises three 33-storey residential towers with almost 1,000 units on 7.8 acres of land.
Tower 1, with 329 units, was launched several months ago and currently has a roughly 70% booking rate.
Tower 2, also with 329 units and 33 storeys, was launched last weekend. It attracted a booking rate of only about 25%.
The poor response to Puteri Cove is in sharp contrast to the launch of the nearby Teega project by UEM Sunrise Bhd in late 2012, which was 98% sold within a month of its launch.
Apart from the now weaker overall market sentiment, there may also be some other reasons for the poor take up at Puteri Cove.
One major reason could be pricing. The “sea view” units are priced at between RM1,300 to RM1,450 psf. The “marina view” units are priced at between RM1,500 to RM1,600 psf.
These prices are higher than the top end of the market in terms of new launches in the area, in a now weaker environment.
Meanwhile, there is also the issue of design. A property investor commented that the design layout of the building looks like flats, with long corridors and up to 14 units per floor served by four central passenger lifts and a service lift.
It remains to be seen whether Puteri Cove’s poor launch take-up rate is due more to the weaker property market or its pricing or other issues.
Whatever the case, it highlights two important lessons.
One, Iskandar is like the goose that lays the golden egg. Don’t kill it by over-expanding development and supply.
Two, a more challenging market means developers must offer their customers a better all-round value proposition.
Read more on this in The Edge this week.
